IASB News
ISSB Defers Decision on Sustainability-Related Disclosures in Management Commentary
The International Sustainability Standards Board (ISSB) has decided to put off a formal vote on whether to propose requiring companies to include sustainability-related financial disclosures in their management commentary, opting instead to revisit the issue at a later meeting. At an October 24 meeting, a majority of ISSB members expressed support for the idea, but had diverse opinions on the timing and specific details of its implementation, indicating that the board had no need to rush into a decision. “I think the majority probably are supportive of the approach and of the importance of the connectivity and the opportunity to show this greater link to the management commentary project,” said ISSB Vice Chair Sue Lloyd, summarizing the board’s stance. ISSB Chair Emmanuel Faber agreed, acknowledging the productive discussion and the importance of considering all viewpoints before making a final decision. He supported the idea of having more informed conversations later, saying, “I think in many ways we have accomplished a lot today… it’s the first time, and we could have gone to a vote, but I think it’s an important matter.”
Grappling with Intangible Assets Project, IASB Seeks to Balance Stakeholder Needs
The IASB is facing significant challenges as it embarks on a project to overhaul its approach to intangible assets, as board members struggle to find common ground on how to proceed. The IASB is tasked with balancing the diverse needs of stakeholders, determining the scope to revise International Accounting Standard (IAS) 38, and addressing both conceptual and practical issues. However, a meeting of the board on October 22 revealed no broad consensus from stakeholders on how to move forward. “The consensus around intangibles probably ends where everybody identifies there’s a problem, but when it comes to what is the problem and how do we remedy this problem … people are all over the place,” said Chair Andreas Barckow, noting that the board’s own members are similarly divided. Barckow outlined three fundamental questions that should guide the IAS 38 project, seeking to clarify the problem, the board’s role, and the communication strategy. At issue: finding a cost-beneficial solution, figuring out whether the information gap is the board’s responsibility to fill, and, if not, how to clearly communicate that and the board’s approach.
FASB News
Derivatives Plan Draws Mixed Reviews from Industry
FASB’s proposal to refine derivative accounting and clarify share-based payments has sparked a mixed reaction from companies, accounting firms, and trade groups, with many expressing concerns over the complexity of the “predominant characteristics assessment.” While there is broad support for FASB’s objectives, some comment letter respondents questioned the operability of the proposed assessment, which aims to determine whether certain contracts should be accounted for as derivatives by evaluating their main features. “We do not believe the proposed predominant characteristics assessment for contracts with multiple underlyings is operable, and we encourage the Board to reconsider an alternative approach,” wrote Grant Thornton. Similarly, Ernst & Young LLP suggested eliminating the predominant characteristics assessment altogether, arguing that it would reduce complexity and costs without affecting the application of scope exceptions. Various organizations, including the Texas Society of CPAs, Virginia Society of CPAs, PNC Financial Services Group, and the International Swaps and Derivatives Association (ISDA), also raised concerns about the complexity and potential costs of the proposed assessment. The ISDA noted, “there are specific areas where the proposed guidance could be modified to reduce the operational burden and provide additional clarity in its implementation without affecting the accounting conclusions.”
